Fashion companies will need to blow off the lid in New York

In New York, a rather remarkable law may be introduced: all large fashion companies selling clothes in the state would have to expose their supply chains and demonstrate the efforts they are making to improve their environmental and social impact.

Applicable to all major fashion multinationals

In the state of New York, a bill to reduce the negative environmental and social impact of the fashion industry is on the table. The ‘Fashion Sustainability and Social Accountability Act’ wants to force all large fashion companies operating in New York to disclose at least half of their supply chain. They would also have to map out all the environmental effects, including greenhouse gas emissions, water consumption and chemical usage, and issues like employee wages.

The law applies to all fashion players generating more than 100 million dollars in sales worldwide each year. All multinationals, from LVMH to Shein, will therefore be affected. The law has been worked on for a year and will be eventually voted on in the late spring. “We want to tie all the big issues together and create industry-wide standards that would effect real change on the ground”, initiator and state senator Alessandra Biaggi explains.

The Fashion Act does not specify which half of the supply chain companies will need to disclose, but it does call on brands to focus on areas with the most significant social and environmental risks. Fashion brands would also be required to reveal general figures, such as total production volume and median wages for their workers. 

Own commitment required

It is not just about transparency: New York does not impose any standards itself, but it requires fashion companies to set scientifically-based goals for themselves. Each company would have to present specific targets for reducing carbon emissions and demonstrate what it is doing to meet these targets annually. The bill also expects concrete measures to embed corporate social responsibility into policy and management.

The Attorney General of the state of New York must enforce the law, but consumers could also sue violators. Fines, which can amount to up to 2 % of annual revenues, are collected in a community fund for environmental projects. However, companies that breach the law will first have three months to rectify their mistakes. If the law were to be enacted, fashion multinationals would have twelve months to publish all the required information on their websites publicly.